externalities
A situation where a third party, outside of a transaction, suffers from a market transaction by others
negative externality
What is a pollution charge
tax imposed on the quantity of pollution that a firm emits
Define nonexcludable.
when it is costly or impossible to exclude someone from using the good and thus hard to charge for it
membership of unions has _________________ since the 1950s
declined
When a business succeeds in developing a new product, what will competitors do?
try to adapt or copy the idea without incurring the research and development costs
A situation where a third party, outside of a transaction, benefits from a market transaction by others
Positive Externality
What is a marketable permit?
allows a firm to emit a certain amount of pollution
Define nonrivalrous.
Even when one person uses a good, other can also use it.
What is collective bargaining?
negotiations between unions and a firm
Market ___________ supports new technology because it encourages improved methods of production, improved product characteristics and provides short-term above-normal profits
competition
the effect of a market exchange on a third party who is outside the exchange
What are property rights?
the legal rights of ownership on which others are not allowed to infringe without paying compensation
What is the free-rider problem?
AND
What happens if everyone is a free-rider
An individual who wants others to pay for public goods, but plans to use those goods for their own purposes
The public good may never be offered
What is bargaining power?
power of members of labor unions collectively negotiating to achieve better economic outcomes
Public policy, as it pertains to technology, should encourage a stream of invention that benefits ____________________________.
the society as a whole
What is it called when the market itself fails to allocate resources efficiently in a way that balances social costs and benefits
Market Failure
(market failure is an example of externalities because market only consider some social costs)
Where does the problem of pollution typically arise
AND
who can fix climate change?
pollution comes from high or low income economies
AND
every country must strike a balance between economic output and environmental quality
What is the sum of private benefits and external benefits
social benefit
Which act specified that workers had a right to organize unions and that management has to give them a fair change to do so?
National Labor Management Relations Act
When a firms invests in new technology, the _______________ are the benefits received by the firm. They are only a portion of the overall social benefit.
private benefits
this includes both the private costs incurred by firms and also costs incurred by third parties outside the production process
social costs
What are three market-oriented approaches to pollution control
pollution charge
better define property rights
marketable permits
What is the fundamental building block of the U.S. economic way of thinking?
the principle that a system of voluntary exchange benefit both parties
What are four reasons union membership has decreased?
-laws enacted making it more difficult to unionize
-shift from manufacturing to service
-globalization and increased foreign competition
-more laws in place now to protect employees
If a firm's efforts to be technologically innovative will create a positive externality, then that firm will likely
have less incentive to innovate to the extent that the whole society desires.